Oil and Gas Mortgage - can we learn anything


#1

I’m curious what an Oil and Gas Mortgage tells one about the value of mineral rights and potential plans for drilling.

Grayton just recorded an Oil and Gas Mortgage on mineral rights on a couple of parcels near mine. They have 7.6 net mineral acres in one and 19.75 in the other. They got a mortgage of $700,000. This works out to about $25k per acre. I’ve been tracking mineral sales in the area for almost a year and they generally run between $4k and $6k per acre. The mortgage is in Custer County, OK in 12-13n-15w and 11-12n-15w.


#2

Are they mortgaging mineral/royalty rights or leasehold (operator) rights? Leasehold rights are generally worth far more than just mineral/royalty rights and as such can demand a higher mortgage.

Likely, the company is raising funds to purchase/lease additional minerals or needs funding for drilling operations (although with that little of acreage I doubt they are drilling).


#3

I think they’re mortgaging mineral/royalty rights but it’s a long document and I haven’t read it all. It says they’re conveying all the Grantors “right, title and interest in and to the following described oil, gas and/or mineral properties, rights and interests…”

It looks like they bought some of the minerals in October in one parcel and December in the other, paying just over $4k per nma for the earlier and $5400 for the later. Both are about a section away from some I’ve been exploring selling and the higher price is in line with the better prices in the area. So, I’ll be sending a note to them. Now that they’ve just raised some money.


#4

Oh wait, I read the December one wrong - they actually sold the mineral rights to Hefner.


#5

But they purchased three parcels in the same corner of the section in late November and early December so it could be the only sold a portion of those to Hefner. I’ll have to recheck back thru the sales and divisions to be certain of all the various NMA of each sale. From the looks of the prices they may have purchased three parcels of about 20 acres each, sold one to Hefner and used one for the mortgage.